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GMT Achieves Interim Earnings Target

9 November 2011

GMT Achieves Interim Earnings Target

Goodman (NZ) Limited, the manager of Goodman Property Trust ("GMT" or "Trust") is pleased to announce the Trust's interim financial result for the six months ended 30 September 2011.

Key highlights include:

• Distributable earnings before tax of $40.2 million or 4.25 cents per unit.

• Profit before tax of $34.9 million compared to $31.7 million in the previous corresponding period.*

• Further refinancing activity with an $80 million tranche of the main bank facility renewed for five years at a competitive margin

• Increasing development activity with the commencement of five new projects providing 45,030 sqm of net rentable area. This compares with 6,900 sqm achieved in the previous corresponding period.

• Strong leasing results across the investment portfolio with over 43,000 sqm of space secured on new or revised terms.

• Achieving an average occupancy rate of 97% over the period with a weighted average lease term of 5.4 years at 30 September 2011.

*The prior period profit result has been restated following a change in the Trust's accounting policies to early adopt the amendment to NZ IAS12 Income Taxes.

Result Overview

The Trust recorded a stable operating result for the six months ended 30 September 2011, consistent with the previous corresponding period and at the mid-point of the guidance range.

Net property income has increased 4.3% to $55.4 million while distributable earnings before tax increased by 5.0% to $40.2 million. The increase from the prior period includes the additional contribution from recent development completions and earlier acquisitions.

John Dakin, Chief Executive Officer of Goodman (NZ) Limited said, "The team have worked hard in a highly competitive leasing environment to ensure that GMT continues to deliver strong rental cashflows. This sustained effort has supported a pleasing operating performance with the Trust achieving a distributable earnings result of $40.2 million, or 4.25 cents per unit, before tax."

A higher effective tax rate this period, as a result of legislative changes removing deductions for building depreciation, has reduced distributable earnings after tax to $36.8 million or 3.90 cents per unit.

Adjustments for non-cash items including deferred tax, changes in the cashflow hedge reserve and fair value changes in interest rate derivatives provide the bridge between distributable earnings and the after tax profit of $29.1 million.

Adjusted net tangible assets remains relatively stable at 97.2 cents per unit compared to 97.3 cents per unit at 31 March 2011.

Portfolio Performance

An active management style and an ongoing focus on customer relationships has helped facilitate strong leasing results, despite challenging market conditions.

Over 43,000 sqm of space was leased during the period with an average lease term of five and a half years. Almost 30% of this space was taken by new customers with the balance being lease renewals and extensions secured from within the portfolio.

This leasing activity has helped the Trust maintain an average occupancy rate of 97% over the six months, with 96% being recorded at 30 September 2011 The Trust has an extended weighted average lease term of 5.4 years at the same date.

Improving demand for new design build facilities and the attraction of the Trust's high quality estates has contributed to a significant lift in development activity with five new projects announced during the period. These projects will provide 45,030 sqm of additional rentable area once completed. They include;

• Commencement of stage one of The Crossing, a mixed use development at Highbrook Business Park, anchored by Quest Serviced Apartments.

• Automotive parts and equipment retailer Super Cheap Auto (New Zealand) Pty Limited committing to a new 20,530 sqm office and warehouse facility at Savill Link in Otahuhu.

• Pre-commitments from specialist food supplier, Scalzo Food Industries Limited and electronics manufacturer and distributor, Panasonic New Zealand Limited at Highbook Business Park.

• A 2,250 sqm extension to an existing facility at Highbrook for National Aluminium Limited.

John Dakin said "It is pleasing that after a period of consolidation, businesses appear to be making strategic decisions about their future property requirements. Securing new commitments from high quality businesses like these will enhance the overall portfolio, creating real value for our investors."

Capital Management

GMT has been prudently managed to ensure it remains a robust business that is able to deliver consistent operating results across a range of market conditions.

Further initiatives were undertaken during the period to maintain the Trust's strong balance sheet position. These included:

• Renewing and extending an $80.0 million tranche of the Trust's syndicated bank facility for a further five years at a competitive margin, ahead of its expiry in October 2011.

• Underwriting the Distribution Reinvestment Plan ("DRP"), for the June and September quarters, raising $33.0 million of equity.

Keith Smith, Chairman of Goodman (NZ) Limited, said, "The refinancing has improved GMT's debt expiry profile, while equity issuance through the DRP has funded the growth of the development business and other value adding investment activity."

At 30 September 2011, the Trust had a loan to value ratio of 35.9%, an interest cover ratio of 2.4 times and weighted average term to expiry across all its debt facilities of 3.5 years.


Experienced directors and strong governance have characterised the operation of the Board of Goodman (NZ) Limited. The appointment of Leonie Freeman in October 2011 ensures a majority of Independent Directors, consistent with best practice.

Chairman, Keith Smith said, "Leonie is a highly regarded property practitioner who brings a complementary skill set to an already capable Board. We are extremely pleased she has agreed to join us."

Leonie has broad experience across a range of property disciplines having held senior valuation, management and education roles. Her 25 year career has also included the establishment of a successful property consultancy and advisory positions with local and central government.

Earnings and distributions

Earnings guidance of 8.4 to 8.6 cents per unit before tax was provided in May 2011. Six months further on the operating environment continues to be challenging with a sluggish economy and changeable business confidence restricting growth.

While the short term outlook remains demanding the medium to longer term view is more positive with increasing levels of business activity expected to raise occupier demand over the next few years.

Subject to achieving certain leasing targets the Board continues to expect distributable earnings for the year to range between 8.4 and 8.6 cents per unit. Under the Trust's policy of paying out around 80% of distributable earnings after tax, it is expected that a full year cash distribution of 6.25 cents per unit will be paid.

A second quarter cash distribution of 1.5625 cents per unit has been declared with 0.1737002 cents per unit of imputation credits attached. The record date for the distribution is 1 December 2011 with payment to be made on 19 December 2011.

Eligible Unitholders are reminded that the Distribution Reinvestment Plan continues to operate with a 2% discount and any amendment to their participation is required by 5:00pm on the record date. Changes should be advised directly to the registrar, Computershare Investor Services.


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